via NewMediaWire -- Mechanical Technology, Incorporated (“MTI”),
(NASDAQ: MKTY), today announced that it and its wholly-owned
subsidiary EcoChain, Inc. (“EcoChain”), a cryptocurrency mining
business powered by renewable energy, have entered into agreements
for EcoChain to acquire Soluna Computing, Inc. (“SCI” or “Soluna”).
Upon closing of the transaction, SCI will become a wholly owned
subsidiary of EcoChain (together, the “Combined Company.”) The
combination will allow SCI to more easily access the capital and
resources necessary to scale its renewable energy-powered data
center solution more quickly and efficiently. Upon closing of the
transaction, MTI plans to change its name to “Soluna Holdings.”
The transaction will place the Combined Company
into the cryptocurrency mining industry’s large-cap peer group
based on its development pipeline. Upon the closing of the
transaction, MTI will gain access to all SCI assets, including its
300MW (megawatt) pipeline that is currently under letters of intent
(“LOI”), bringing EcoChain’s combined total to 350MW, with over
200MW more under active development. EcoChain will directly
employ or retain Soluna’s top-tier technical and management team,
bringing expertise in project development, energy markets, project
finance and computing technology. EcoChain expects to have 50MW
operational by the end of 2021 and another 50MW by the end of the
second quarter of 2022. By the end of 2022, EcoChain expects to
have two-thirds of Soluna’s current pipeline operational.
“I am thrilled to increase the size and scope of
our company and this transaction puts us in an even stronger
position to provide significant value for investors,” said Michael
Toporek, Chief Executive Officer of MTI. “The Soluna team has hit
upon a formula for creating and creatively financing computing
facilities by solving power producers’ and grid operators’ inherent
supply and demand problems, that is, the excess energy produced but
not used as a result of the mismatch between the time of energy
production, or daytime, and the time when energy use is at its
highest, or evening/nighttime, which have increased as total
renewable energy production continues to grow. We believe
that solving the supply and demand problem of the renewable energy
industry will serve as a driver for the growth, scalability, and
profitability of ‘green’ computing.”
During 2021 EcoChain has been aggressively
ramping up its capacity to meet its 50MW goal by the end of 2021.
Based on current plans, EcoChain expects in August to increase its
hash rate (a measuring unit of processing power) over July by 269%
and that by the end of September, its hash rate will have increased
by 863% from July.
“We’re excited about this transaction and the
opportunities it brings for Soluna to continue helping renewable
power producers sell every megawatt of energy,” said John
Belizaire, Chief Executive Officer of SCI. “We believe that what
Soluna is offering now will be an industry standard within three
years. It’s up to the first movers among renewable power producers
to seize this revenue advantage.”
Transaction Highlights
- Upon closing, MTI acquires 300MW of green powered computing
projects under LOI with costs well under $0.03 per KWh (kilowatt
hour)
- Active global pipeline of over 200MW of additional
projects
- Soluna team is joining EcoChain with John Belizaire as CEO of
the combined business unit, which we plan to rename “Soluna
Computing”
- MTI CEO Michael Toporek will continue to serve as CEO of the
newly renamed Soluna Holdings
Financial Highlights
MTI continues to develop its business in a capital-efficient
fashion with the acquisition of SCI. MTI will issue consideration
to SCI as value is received to prevent any earnings dilution.
Certain terms of the transaction are summarized below:
- 92% of total consideration is contingent upon projects coming
online
- $725,000 cash at closing
- $75,000 for transaction fees and expenses at closing
- 150,000 shares of MTI common stock issued at closing
- Up to 2,970,000 shares of MTI common stock may be issued based
on building out an additional 150MW:
- Contingent shares are not issued, escrowed or outstanding at
closing
- For earnings per share calculations, the number of shares
outstanding only changes when revenues are about to increase from a
project coming online
Michael Toporek added, “Our company will
continue to focus on driving return on invested capital,
transparency and accountability as we grow our mining business by
providing solutions to power producers and grid managers. We
believe every renewable energy project will be considering a green
computing component; as we like to say, ‘green computing is a
better battery.’”
A presentation and corresponding video is available on the
Company’s website at:
https://www.mechtech.com/mti-announces-SolunaComputing-Acquisition
About MTI
MTI is the parent company of MTI Instruments,
Inc. and EcoChain, Inc. Through EcoChain, MTI develops
cryptocurrency mining facilities powered by renewable energy that
integrate with the blockchain network. Through MTI Instruments, MTI
is engaged in the design, manufacture and sale of test and
measurement instruments and systems that use a comprehensive array
of technologies to solve complex, real-world applications in
numerous industries. Those include manufacturing, electronics,
semiconductor, solar, commercial and military aviation, automotive
and data storage. For more information about MTI, please
visit https://www.mechtech.com.
Additional Information About the Transaction and Where to
Find It
In connection with the proposed transaction, MTI
will file with the U.S. Securities and Exchange Commission (the
“SEC”) a proxy statement (the “Proxy Statement”) as well as other
relevant documents concerning the proposed transaction.
STOCKHOLDERS OF MTI AND OTHER INTERESTED PARTIES ARE URGED TO
READ THE PROXY STATEMENT REGARDING THE TRANSACTION WHEN IT BECOMES
AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS
WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION. The Proxy Statement
will be mailed to MTI’s stockholders prior to the MTI stockholder
meeting to be held to approve the proposed transaction, the
agreement, MTI’s issuance of shares of its common stock thereunder,
and certain related matters, which meeting has not yet been
scheduled. In addition, when the Proxy Statement and other related
documents are filed by MTI with the SEC, they may be obtained for
free at the SEC’s website at http://www.sec.gov and from MTI’s
website at http://www. mechtech.com.
Participants in the Solicitation
MTI and its respective executive officers and
directors may be deemed to be participants in the solicitation of
proxies from MTI’s stockholders in connection with the proposed
transaction. Information about MTI’s directors and executive
officers is set forth in the proxy statement for MTI’s 2021 annual
meeting of stockholders, as filed with the SEC on May 18, 2021, and
information about MTI’s directors’ and executive officers’
interests in the proposed transaction is set forth in MTI’s Current
Report on Form 8-K filed with the SEC on the date hereof.
Information about any other persons who may, under the rules of the
SEC, be considered participants in the solicitation of MTI’s
stockholders in connection with the proposed transaction will be
included in the Proxy Statement. You can obtain free copies of
these documents from the SEC or MTI using the website information
above.
MTI STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT
CAREFULLY WHEN IT BECOMES AVAILABLE BEFORE MAKING ANY VOTING
DECISIONS WITH RESPECT TO THE PROPOSED TRANSACTION AND THE RELATED
MATTERS.
Forward Looking Statement
The statements in this press release that are
not historical facts, in particular the statements with respect to
the expected benefits of the merger, the MW EcoChain will have
operational and its expected hash rate at future dates, and
Soluna’s offering becoming a driver for growth, scalability, and
profitability in the “green” computing industry, constitute
forward-looking statements within the meaning of the federal
securities laws. Forward-looking statements reflect management’s
current expectations, as of the date of this press release, and are
subject to certain risks and uncertainties that could cause actual
results to differ materially from future results expressed or
implied by such forward-looking statements. Actual results could
differ materially from those expressed or implied by such
forward-looking statements as a result of various factors,
including, but not limited to: (1) Soluna’s businesses may not be
integrated into EcoChain’s successfully or such integration may be
more difficult, time-consuming, or costly than expected; (2)
expected cost savings from the transaction may not be fully
realized or realized within the expected timeframe; (3) revenues
following the transaction may be lower than expected; (4)
negotiations with counterparties in the projects in Soluna’s
development pipeline may be disrupted by the proposed transaction;
(5) MTI may not be able to obtain the required stockholder
approvals; (6) changes in laws, regulations, and policies, and
industry developments generally, that negatively impact the
cryptocurrency mining industry or the renewable power industry, in
particular, EcoChain’s ability to purchase renewable power
producers’ and grid operators’ excess energy; and (7) other
risks and uncertainties that may be detailed from time to time in
MTI’s reports filed with the SEC.
Contact Information:
Lisa Brennan lbrennan@mtiinstruments.com
Investor Relations:
Kirin Smith, President PCG Advisory, Inc. 646.823.8656
Ksmith@pcgadvisory.com
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